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Harvey Stack Remembers Part 76

Harvey Stack Remembers: Growing up in a Numismatic Family, Part 76

By Harvey Stack, Co-Founder

Author: Harvey Stack / Wednesday, August 12, 2020 / Categories: Harvey G. Stack Remembers

In 1979 several influential things changed numismatics, including precious metal investments, multi-dealer auction events, the slowing of growth in the hobby, the last release of Carson City silver dollars, and several important collections crossing the auction block.

In the economic market one very wealthy Texas oil family tried to corner the market on silver, as the need for silver in electronics, aviation, and other advanced manufacturing caused its value to go up. The Hunt Family of Texas, led by Bunker Hunt, was looking for a way to add to their already immense wealth by cornering the market on a commodity, in this case silver. They had bought up a large amount of silver earlier in the 1970s and stored it in vaults in Switzerland. Then in 1979 they were big buyers again. By the end of the year they owned huge amounts of silver, as well as silver futures and with the price of silver rising, they were raking in the money, as well as more silver. It was said that in 1979, the Hunt Brothers owned over 60% of all the tradable silver in the world.

This trading by the Hunt's had a big influence on silver coins, as the fluctuation in value caused great speculation as the metal was either hoarded or coins, household silver, unused candlesticks, etc., were sold at inflated prices. It was like a wild west at coin dealers, pawn shops and local assayers; as the value increased, so did the price, and so did speculation.

The Hunts traded as if there was no tomorrow. Before 1979, banks accepted for a period the hedging done by the Hunt's using the silver as collateral. But then they started to call the loans, or not renew the contracts, causing a demand on the markets that the Hunt’s had to cover or sell. Within a few months of the "calls" being made, the price of silver went from just over $10 per ounce to almost $50 per ounce. When the Hunts, who controlled such a vast amount at high prices, couldn’t get coverage by the banks or other speculators, the price of silver dropped back to less than $10 per ounce. The speculation on silver by the Hunts caused the family to go bankrupt and had a very negative effect on markets, including the coin market.

This created a quick change in the inflationary trends of the overall economy, and depression like results affected all things – from food to cars to collectibles and, of course, the general economy. The value of numismatic items dropped as fewer of the collectors and investors who had stimulated the growth of numismatics had the funds to continue supporting their hobby.

Yet, though the silver market went down and coin prices dropped, even for gold coins, classic collectors held on to their collections and continued to seek choice and rare items to add to cabinets. Though the market dropped considerably it did not go into a deflationary state.